Sign at the main entrance of a Best Buy store in Venice, Florida.
Erik McGregor | Light rocket | fake images
Best buy posted mixed results on Tuesday, as the retailer's sales during the Christmas quarter declined and missed Wall Street expectations, but its profits beat estimates as it showed better profitability.
For the current fiscal year, the consumer electronics retailer expects revenue to be between $41.2 billion and $42.1 billion, compared to $41.69 billion in the most recent fiscal year. It expects adjusted earnings per share to range between $6.30 and $6.60, after reporting adjusted earnings per share of $6.43 during the previous fiscal year.
Best Buy anticipates comparable sales, a metric that tracks sales online and in stores open for at least 14 months, will range between a 1% decline and a 1% increase.
In a news release, CEO Corie Barry said demand for consumer electronics remained lackluster during the gifting season, but internal company data indicates Best Buy's market share in the industry “was at least flat.”
Chief Financial Officer Matt Bilunas said in his own statement that the company is “excited about the momentum in our business.” But he added that company leaders “hope to continue navigating a mixed macroeconomic environment.”
Best Buy shares closed more than 7% higher on Tuesday.
Here's how the retailer fared in the fiscal fourth quarter compared to what Wall Street expected, according to a survey of LSEG analysts:
- Earnings per share: $2.61 adjusted vs. $2.47 expected
- Revenue: $13.81 billion vs. $13.88 billion expected
In the three months ended Jan. 31, Best Buy's net income jumped to $541 million, or $2.56 per share, from $117 million, or 54 cents per share, in the year-earlier quarter. Excluding one-time expenses, including charges for its healthcare business, Best Buy reported adjusted earnings per share of $2.61.
Revenue decreased from $13.95 billion in the prior-year quarter. However, on an annual basis, revenue rose to $41.69 billion from $41.53 billion in the previous fiscal year. Best Buy's annual revenue declined in the previous three fiscal years.
For about four years, Best Buy has attributed its slower sales to more price-sensitive American consumers, a slower housing market and less technological innovation. All of those factors have caused some buyers to delay technology purchases, particularly big-ticket items like new refrigerators.
In a call with reporters, Barry said the company continues to see consistent behaviors in both higher-income cohorts and lower-income groups. While he said Best Buy is seeing some weakness in sales of higher-ticket items, the other end of the customer base is “resilient” and “deal-focused.”
More than half of Best Buy's customer base is in the $100,000 or more income bracket, he added.
“I think it's important to know where we've seen innovation, where there's a little bit more newness… people are willing to access those higher prices across all income cohorts,” Barry said on the call.
Higher tariffs have also added costs for Best Buy, since many consumer electronics products are imported. Barry said the company's “last resort” is to raise prices and is instead focusing on diversifying its supply chain and negotiating costs with suppliers.
Comparable sales fell 0.8% in the fourth quarter as the company experienced lower sales of home appliances and home theaters. Those declines were partially offset by sales growth in computing and mobile phones, the company said.
Best Buy has pivoted toward more profitable businesses, including selling ads and offering more products through its third-party marketplace, which launched in August. Barry said in the company's news release that Best Buy's advertising partners nearly doubled compared to the previous year and said the retailer has significantly increased the number of products available on the market.
